The performance is better than expected, and the profit margin continues to improve.
The company's FY2020 achieved an income of 867 million yuan (+ 21.4%) and refunded 31 million yuan in accommodation fees affected by the epidemic; adult education business is growing rapidly. Gross profit 606 million yuan (+ 25.8%); net profit 565 million yuan (+ 23.8%); adjusted net profit 608 million yuan (+ 35.3%). Gross profit margin and adjusted net profit margin are 69.9% (+ 2.4%) and 70.1% (+ 7.2%), respectively. Harbin school has not consolidated its income for the time being. If it is assumed that Harbin school will be consolidated for the whole year, the main income, gross profit and adjusted net profit will increase by 45.5%, 50.0% and 35.4% respectively compared with the same period last year.
Strong endogenous growth, new campus put into use
In the 2020x2021 school year, the number of students in the company's two schools in Guangdong was 82000 (+ 41.6%), and the total number of students in Harbin school reached 92700 (+ 60.1%). Among them, the number of undergraduate, on-campus and off-campus adult education increased by 64.0%, 53.0% and 112.0% respectively compared with the same period last year, and the scale of adult education ranked first in the industry. The enrollment scale of the 2020 / 2021 academic year has been expanded, with 11000 undergraduate students (including junior college students). There are no graduates yet, and the number of new students has contributed to a net increase.
In terms of tuition fees, the tuition fees of the three schools have each increased by more than 10%. In terms of capacity, the new Dinghu Phase III campus has been put into use, with 2800 new beds and a rapid increase in utilization. In addition, Guangdong Institute of Technology has been qualified as an undergraduate examiner in the self-examination, and the adult self-examination has become a new growth bright spot of the group.
The extension merger and acquisition plan is clear, and Huaibei Institute of Technology is expected to contribute to the growth. The New Power Company will acquire 45% of the shares of Huaibei University in September 2019, and it is expected to complete the construction of the new campus and the acquisition of the remaining shares by the end of March this year. 100% holding will be achieved; the conversion will be completed and enrollment will begin before September, and all the income and profits of new students will be owned by the joint venture company. The enrollment and merger of the Huaibei Institute of Technology project symbolizes the formal completion of the company's strategic layout in the Yangtze River Delta region. Anhui Province, as a major province for the college entrance examination, has plenty of room for growth in the future. In 2021, the company will continue to work hard to promote new M & A projects.
Maintain the profit forecast, maintain the reasonable valuation range and "buy" rating, we expect FY2021-2023 income to be 12.81,15.70 and 1.776 billion yuan respectively (including Harbin school income). The net profit was 7.64,9.29 and 1.065 billion yuan respectively. The April 9 closing price of HK $5.14 corresponds to the forecast PE of 11.40,9.37 and 8.18 times for 2021-2023, respectively. Maintain a "buy" rating and a reasonable valuation range of HK $6.96 to HK $8.46.
Risk Tips:
The progress of transfer is not as expected; the progress of expansion is not as expected; there are negative events in school operation and management.